Riding Herd “The greatest homage we can pay to truth is to use it.” – JAMES RUSSELL LOWELL
June 15, 2020 • www.aaalivestock.com
Volume 62 • No. 6
Begging For Bones BY LEE PITTS
Don’t squat with your spurs on.
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NEWSPAPER PRIORITY HANDLING
early 40 years ago we were the first, if not the only livestock periodical, to warn ranchers about the packers desire to turn the cattle industry into something akin to the chicken industry. We called it “The Chicken Model” where packers would make contracts with ranchers and feedlot operators and the final price would be set by a complicated formula benefitting the packer. We were told time and again that this could never happen in the cattle industry because chickens could be raised in a minimum of space, whereas cattle required huge expanses of land. Others liked the idea and told us that a contract cattle system would result in more efficiency and security for ranchers. Some even suggested the chicken model would result in greater profits and that it did... for the packers and the retailers. Mostly we were told the cattle industry would never look anything like the poultry industry because ranchers would never let that happen, and yet by 2004, 30% of the cattle produced in this country were sold on a formula. By 2019, 66% or two out of every three head of fat cattle were formula cattle. As price discovery in the cattle market was disappearing, so too were ranchers and we lost over half the the ranchers in this country as we became more “chickenized”. There has been no trickle down economics as the packers got bigger and more powerful. While wholesale prices for beef rose 38% in April, the price of rounds and chucks was up 40%, and retail prices for beef were up 20-25%, yet the prices for feeders and stockers were falling 30%! During the past few
months while packers were making anywhere from $600 to $1,500 per head, feedyards and ranchers were losing $400 each on every head they produced. Just a few short years ago ranchers were getting up to $1,600 per head for a 600 pound steer... today they are getting half of that. The packers were partially successful in turning the cattle industry into a clone of the chicken industry. The dominoes were starting to fall into place for the packers and then packers did what packers always do... they got even more greedy. While cattlemen were fighting to remain independent they only had to look at the pork industry to see what could happen to them. According to Successful Farming Magazine as quoted by Alan Guebert, 40 multinational companies now own 4,290,700 sows in this country, that’s two out of every three in
America and fifteen of those 40 pig producers are fully integrated with a packer. And the biggest pork packer, Smithfield, was sold to the communist Chinese! Today the pork industry has been totally chickenized and in the process 90% of pork producers went out of business. The ONLY reason the cattle industry couldn’t be totally chickenized is because we had something the poultry pluckers did not: auction markets and video auctions where we still had some semblance of price discovery.
Going Viral It seemed like only weeks ago that Cattle Fax, as part of the 2020 NCBA Convention, was predicting, “Beef demand is strong and with U.S. cattle numbers plateauing, prices are likely to be stronger in the year ahead as consumers at home
and abroad support industry profitability.” And then the cattle industry caught the flu. Now the Livestock Marketing Information Center says that prices to the rancher in the first quarter were down 15-17% and as this issue went to press prices were down 25% in the second quarter. The LMIC predicts that prices for cattle to the rancher will be down again in the third and fourth quarters as well. They see some recovery possible in 2021, “but nothing significant.” I don’t know about you but I’m getting sick of all this talk during the Covid crises that “we’re all in this together.” HA! The bureaucrats in DC are still getting their paychecks, they haven’t dumped any milk down the drain, euthanized any hogs or committed suicide because they lost the family ranch. While retailers and packers were getting rich and beef was flying off the shelves at the highest prices in recorded history, cow calf producers were seeing their world cave in. Consider this: since January the price of boxed beef that packers sell to retailers has gone up 100%, while cattle prices went down 30%! How is this even possible?
On Fire! continued on page two
Study Shows Utah Shorted $100s of Millions in Payment in Lieu of Taxes Payments
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ayments in Lieu of Taxes (PILT) are federal payments to local governments that help offset losses in property taxes due to the existence of nontaxable federal lands within their boundaries, according to the U.S. Department of the Interior (DOI). The original law is Public Law 94-565, dated October 20, 1976. This law was rewritten and amended by Public Law 97-258 on September 13, 1982 and codified at Chapter 69, Title 31 of the United States Code. The law recognizes the financial impact of the inability of local governments to collect property taxes on federally owned land. PILT payments help local governments carry out such vital services as firefighting and police protection, construction of public schools and roads, and search-and-rescue operations. The payments are made annually for tax-exempt Federal lands administered by the Bureau of Land Management, the National Park Service, the U.S. Fish and Wildlife Service (all bureaus of the Department of the Interior [DOI]), and the U.S. Forest Service (part of the U.S. Department of Agriculture) and for Federal water projects and some military installations. PILT payments are one of the ways the Federal Government can fulfill its role of being a good
neighbor to local communities.
Utah Federal Land Valuation Study A study was contracted as directed by HB 357, a bill sponsored by State Representative Ken Ivory and passed unanimously by both the Utah House and Senate in 2018. The results were produced by a state-of-the-art land valuation model designed by Geomancer. Geomancer (now part of AEON AI) presented results of their Utah federal land valuation study to the Federalism Commission of the Utah legislature on May 22, 2020.
Summary of Key Results The Federal Land Valuation Study appraised three categories of federal lands: Category 1 32 million acres of federal lands were assessed at the lowest taxable value, which is a category called unimproved recreational use; Category 2 218,000 acres of undeveloped BLM and Forest Service land within municipal boundaries were assessed at the lowest taxable value according to each city’s current zoning or general plan; and continued on page four
by LEE PITTS
Freedom Stew
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ar too often we forget how lucky we are to live in America. When our life’s lottery ticket was punched we definitely hit the jackpot. Every so often it’s good to remind ourselves what it is that makes our country so special. The recipe that made America great calls for one giant melting pot that has been well oiled by freedom. The main ingredient is that someone in your family came here from someplace else. They came so they wouldn’t have to goose step in some May Day parade, hide their faces behind a veil, live on their knees or wouldn’t have to crack the heels of their boots together and “sieg heil” anyone ever again. They live here so they wouldn’t have to live in fear of being imprisoned for having a contrary opinion. They came to America so they could dare to dream their own dreams and live their own lives, not one dictated by a despot, tyrant, potentate or dictator. In this melting pot slowly stir in American Indians and their culture of spirituality, respect for their elders and love of the land. Then add thousands of Chinese who left a homeland that would have hung them for trying to leave. The Chinese came anyway even though they were despised and would’ve been hung on the nearest tree for doing anything wrong. They came to build a railroad, the Central Pacific, from Sacramento over and through the mighty Sierra’s to Promontory Point and now their descendants are graduating with honors from Stanford and building tech companies worth billions of dollars. Our recipe calls for a big glass full of Irish. If the Chinese built the western part of the rails it was the Irish who laid the eastern ones. The Irish left a worn out land that offered them only poverty and starvation, to a new country that suited them well. After the bare knuckled brawlers helped build the railroads they built our towns and cities too. Today you can still walk into neighborhood pubs in America, hear a bit
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